Term Insurance: Why Every Earner Needs One

Term insurance is a pure life cover — if you die during the policy term, your nominee receives the sum assured. It's the most important financial product for anyone with dependents.

How Much Cover Do You Need? The thumb rule is 15-20x your annual income. If you earn ₹12 lakh per year, you need at least ₹1.5-2 crore cover. Also factor in: - Outstanding loans (home loan, car loan) - Children's education fund - Spouse's living expenses for 15-20 years

When to Buy Buy as early as possible. A 25-year-old pays ₹500/month for ₹1 crore cover. A 35-year-old pays ₹1,000/month for the same. By 45, it costs ₹2,500/month. Early purchase locks in lower premiums for life.

Popular Term Plans (2025) 1. Max Life Smart Secure Plus — 99.35% claim settlement ratio 2. HDFC Life Click 2 Protect — 98.5% settlement, trusted brand 3. Tata AIA Sampoorna Raksha — 98.6% settlement, up to ₹25 crore 4. ICICI Pru iProtect Smart — 97.9%, 4-in-1 protection 5. SBI Life eShield Next — 97.8%, most affordable

Key Features to Look For 1. High claim settlement ratio (above 97%) 2. No hidden exclusions 3. Critical illness rider 4. Waiver of premium on disability 5. Multiple payout options (lump sum + monthly income)

Common Mistakes 1. Buying insurance-cum-investment plans (endowment, ULIP) instead of pure term 2. Under-insuring — ₹50 lakh is not enough if you earn ₹10 lakh/year 3. Not disclosing medical history — leads to claim rejection 4. Delaying purchase — premiums increase every year 5. Not adding a critical illness rider